TELECOM DISPUTES
SETTLEMENT & APPELLATE TRIBUNAL
NEW DELHI
Dated 4th March, 2010
Petition No.244 of 2009
(M.A. No. 150 of 2009)
Bharti Airtel Limited & Anr. … Petitioner
Versus
Department of
Telecommunications (DoT) … Respondent
BEFORE:
HON’BLE MR. JUSTICE S.B.SINHA, CHAIRPERSON
HON’BLE MR. G.D. GAIHA, MEMBER
|
For Petitioner |
: |
Mr.Ramji Srinivasan,
Sr.Advocate with Mr. Kaushik Mishra, Advocate |
|
For Respondent |
: |
Mr. Vineet Malhotra,
Advocate Mr. Shankar Chabra,
Advocate Mr. Anurag Sharma,
Advocate |
JUDGMENT
S.B. Sinha
These two petitioners Bharti
Airtel Limited and Bharti Hexacom Limited are before us questioning inter alia the
legality of an order dated 17.9.2009 issued by the respondent herein and the
reminders issued in relation thereto being dated 7.10.2009 and 29.10.2009.
The said
Order dated 17.9.09 reads as under:-
“Sub: Re-assessment of annual License fee for the
financial year 2005-06 in respect of your CMTS license for A.P., Chennai,
Delhi, Gujrat, H.P., Haryana, Karnataka, Kerala, Kolkata, M.P., Maharashtra,
Mumbai, Punjab, Tamil Nadu, UP (West), Rajasthan and N.E. licensed Service
Areas.
Ref: This office letter of even no.dated
17.05.2008
1. This concerns re-assessment of annual
License Fee for the financial year 2005-06 in respect of the CMTS License of
M/s Bharti Airtel Ltd. for the license service areas of A.P., Chennai, Delhi,
Gujrat, H.P., Haryana, Karnataka, Kerala, Kolkata, M.P., Maharashtra, Mumbai,
Punjab, Tamil Nadu, UP(West), Rajasthan and N.E.
2. As per the extant license agreement,
deductions from the Gross Revenue on account of (a) PSTN related call charges
(Access charges) actually paid to other eligible/entitled telecom service
providers within India and (b) Roaming charges actually paid to other
operators, during the financial year are admissible.
3. You were directed to submit the duly
audited quarter-wise operator-wise details of PSTN related call charges and
Roaming charges actually paid to eligible/entitled telecom operators during the
financial year 2005-06.
4. On submission of the requisite details by
you, the re-assessment of annual License Fee for the financial year 2005-06 has
been carried out after going through the Audited quarter-wise, operator-wise
details of pass through charges and Roaming charges actually paid to other
Telecom Services providers. The summary
of the re-assessment is as under:
|
Service Area |
AGR |
Revenue
Share Due |
Revenue
Share Paid |
Difference
(C-D) |
Interest
on delayed payment calculated up to 30.09.2009 |
Penalty
and interest on penalty if any |
Total
dues |
|
AP |
6363311647 |
509064932 |
507297002 |
1767930 |
1502876 |
0 |
3270806 |
|
Chen. |
4883036567 |
488303657 |
479771258 |
8532399 |
6745475 |
0 |
15277874 |
|
Delhi |
16125650624 |
1612565062 |
1546071590 |
66493472 |
41953225 |
0 |
108446697 |
|
Guj |
2283446076 |
228344608 |
221059736 |
7284872 |
4439101 |
0 |
11723973 |
|
Har. |
1370247685 |
109619815 |
110966080 |
-1346365 |
12101 |
0 |
-1334164 |
|
HP |
1223407512 |
61170376 |
61767233 |
-596857 |
61953 |
0 |
-534904 |
|
Ktka |
11525415321 |
922033226 |
948598655 |
-26565429 |
240556 |
0 |
-26324873 |
|
Ker. |
1680892919 |
134471434 |
134854806 |
-383372 |
48992 |
0 |
-334380 |
|
Kol. |
2559415852 |
255941585 |
253172646 |
2768939 |
2072949 |
0 |
4841888 |
|
Mah. |
4019336042 |
401933604 |
402526999 |
-593395 |
5547 |
0 |
-587848 |
|
MP |
3034634275 |
243699691 |
230832931 |
12866760 |
7958976 |
0 |
20825735 |
|
Mum. |
5169708357 |
516970836 |
525685756 |
-8714920 |
232380 |
0 |
-8482540 |
|
Punjab |
6615510082 |
396930605 |
399361720 |
-2431115 |
41491 |
0 |
-2389624 |
|
T.N. |
2788265428 |
278826543 |
278811395 |
60115148 |
5142610 |
0 |
11157758 |
|
UP(W) |
1684662404 |
134772992 |
134739393 |
33599 |
487356 |
0 |
520955 |
|
Raj. |
3280897466 |
196853848 |
196991889 |
-138041 |
737086 |
0 |
599045 |
|
N.E. |
75074233 |
3753712 |
3874434 |
-120722 |
4213 |
0 |
-116509 |
E&OE Total
amount payable: Rs.17,66,64,731/-
(Rs.Seventeen Crores sixty six Lakhs sixty four thousand
seven hundred thirty one only)
5. The above amount is due after calculating
interest up to 30.09.2009. It may be
noted that there is an excess of Rs.13,34,164/- 5,34,904/-, 2,63,24,873/-,
3,34,380/-, 5,87,848/- 84,82,540/-, 23,89,624/- and 1,16,509/- in respect of
Haryana, H.P., Karnataka, Kerala, Mah, Mumbai, Punjab and North East licensed
service areas respectively. The excess
amounts so arrived at will be adjusted against the future dues in respect of
the same Licensed service area, if not adjusted earlier.
6. The calculation sheets containing
computation of the AGR and interest amount are annexed to this letter. You are directed to remit the sum of
Rs.17,66,64,731/-. (Rs.Seventeen Crores sixty six Lakhs sixty four thousand seven
hundred thirty one only) forthwith.
7. You are also directed to submit the
auditor’s note stating that the deductions claimed on account of PSTN related
call charges and Roaming charges include/do not include Port Charges and Leased
Line charges actually paid to other operators during the year 2005-06. If these are included, audited details of the
same may also be provided.”
Along with the said demand, several
sheets had been annexed directing the petitioners to make payments of the Adjusted
Gross Revenue (AGR), in respect of service areas of Andhra Pradesh, Karnataka,
Punjab, Chennai, Delhi, Gujarat, Haryana, Himachal Pradesh, Kerala, Calcutta,
Maharashtra, Madhya Pradesh, U.P. (West), Mumbai and Tamil Nadu Service Areas
and so far as the petitioner no. 2 is concerned, the service areas of Rajasthan
and North East.
The petitioners herein are licensees;
the licenses having been granted by the respondent in terms of the provisions
of Section 4 of the Indian Telegraphs Act, 1885 (1885 Act).
Indisputably,
pursuant to or in furtherance of a migration package offered to the petitioners
by the respondent herein and they having accepted the same, the license fees
were required to be calculated on Adjusted Gross Revenue (AGR) basis and was
only payable on revenue accruing under the licenses.
The
respondent included in licensing activities, while computing the amount of AGR,
however, included earnings from revenue, which according to the petitioner had
not accrued from the telecommunication activities. It gave rise to a dispute by and between the
petitioner No. 1 and the respondent as according to the letter it was entitled
to calculate the license fees on a revenue sharing basis, “as it thinks fit”. The petitioner No. 1 filed a petition before
this Tribunal marked as Petition No. 82 of 2005 challenging the mode of calculation
of the license fees by the respondent under the agreement. Indisputably, the Cellular Operators
Association of India (COAI) and Association of Unified Access Service Providers
of India (AUSPI) and various other operators also filed similar
applications.
By
reason of a judgment and order dated 7.7.2006, this Tribunal held as under:-
“in
our opinion, it would be doing violence to the section if we are to accept the
argument of the learned counsel for the 1st respondent that words
“as it thinks fit” found in the proviso would allow the government to demand
and collect a share of revenue from all the activities of the licensee
irrespective of the fact whether such revenue is traceable to the revenue
realized from the activities under the license or not……we are of the opinion
that we do not think in the migration package the government had indicated that
it would be demanding a percentage of share even in the unlicensed activity of
the company. We have already noticed Section-4
of the Telegraph Act does not permit such a demand…… We think it more appropriate that the matter
should be remanded to the TRAI which is the 3rd respondent herein,
before whom the government should produce the material relied by it while
rejecting TRAI’s recommendation so that TRAI can consider the same and send its
conclusions to this Tribunal and thereafter, this Tribunal will have the
benefit of a comprehensive recommendation of the TRAI after considering the
materials relied upon by the government”
It is not in controversy that the said
judgment has attained finality. The
respondent preferred an appeal thereagainst before the Supreme Court of India
which was dismissed by an order dated 19.1.2007 holding as under:-
“Heard
the parties.
Pursuant to the direction of
the TDSAT in the impugned order, a fresh recommendation has been made by the
TRAI. In view thereof, we see no reasons to interfere. The appeal is dismissed.
The appellant is, however, given liberty to urge all the contentions raised in
this petition before the TDSAT.”
Pursuant to or in furtherance of the
observations and directions issued by this Tribunal, in its judgment dated
7.7.2006, the Telecom Regulatory Authority of India (TRAI) made recommendations
on different components of revenue generated from it which should form part of
the AGR and which should not form part thereof.
The
said recommendations were considered by this Tribunal in its judgment dated
30.8.2007. This Tribunal accepted the
recommendations made by TRAI. We would
refer to the relevant portions thereof a little later.
The
petitioner No. 2 thereafter filed a petition before this Tribunal which was
disposed of by an order dated 31.10.2007 (marked as Petition Nos. 289 & 292
of 2007).
By
Orders dated 23.10.2007 and 31.10.2007, this Tribunal upheld its earlier
judgment.
By a communication dated 17.5.2007 the
respondent asked the petitioner to furnish duly audited detailed account in
respect of PSTN relating to payments made to the operators pursuant whereto
calculations were provided on actually paid basis, in the following terms:-
“Sub:
Assessment of annual License fee for the financial year 2005-06 in respect of
your CMTS license for A.P., Chennai, Delhi, Gujrat, H.P., Haryana, Karnataka,
Kerala, Kolkata, M.P., Maharashtra, Mumbai, Punjab, Tamil Nadu, UP (West),
license Service Areas.
1. This concerns re-assessment of annual
License Fee for the financial year 2005-06 in respect of the CMTS License of
M/s Bharti Airtel Ltd. for the license service areas of A.P., Chennai, Delhi,
Gujrat, H.P., Haryana, Karnataka, Kerala, Kolkata, M.P., Maharashtra, Mumbai,
Punjab, Tamil Nadu, UP(West) license service areas. The following documents – Audited Annual
Accounts, Statement of Revenue and License Fee, Reconciliation statements for
the financial year 2005-06 and other related documents submitted by the
Licensee have been taken into consideration for the assessment.
The summary of the re-assessment is as under:
|
Service Area |
AGR |
Revenue
Share Due |
Revenue
Share Paid |
Difference
(C-D) |
Interest
on delayed payment calculated up to 31.05.07 |
Penalty
and interest on penalty if any |
Total
dues (+)/ excess (-) |
|
AP |
6266378170 |
501310254 |
507297002 |
-5986748 |
51670 |
0 |
-5935078 |
|
Chen. |
4771173098 |
477117310 |
479771258 |
-2653948 |
138789 |
0 |
-2515159 |
|
Delhi |
15416862657 |
1541686266 |
1546071590 |
-4385324 |
0 |
0 |
-4385324 |
|
Guj |
223956695 |
222395670 |
221059736 |
1335934 |
495700 |
0 |
1831634 |
|
HP |
1204128403 |
60206420 |
61767233 |
-1560813 |
12526 |
0 |
-1548287 |
|
Haryana |
1344519786 |
107561583 |
110966080 |
-3404497 |
0 |
0 |
-3404497 |
|
Ktka |
11410610913 |
912848873 |
948598655 |
-35749782 |
18089 |
0 |
-35731692 |
|
Ker. |
1648347467 |
131867797 |
134854806 |
-2987009 |
7152 |
0 |
-2979856 |
|
Kol. |
2506426758 |
250642676 |
253112000 |
-2469325 |
129007 |
0 |
-2340318 |
|
M.P. |
2869803528 |
229584282 |
230832931 |
-1248649 |
27558 |
0 |
-1221090 |
|
Mah. |
3948435984 |
394843598 |
402526999 |
-7683401 |
0 |
0 |
-7683401 |
|
Mum. |
5207917709 |
520791771 |
525685756 |
-4893985 |
125082 |
0 |
-4768903 |
|
Punjab |
6606785216 |
396407113 |
399361720 |
-2954607 |
17805 |
0 |
-2936802 |
|
T.N. |
2665965152 |
266596515 |
272811395 |
-6214880 |
136386 |
0 |
-6078494 |
|
UP(W) |
1669037183 |
133522975 |
134739393 |
-1216418 |
14442 |
0 |
-1201976 |
E&OE
3. The calculation sheets for computation of
the AGR and interest amounts are annexed to this letter. It may be noted that there is an excess of
Rs.5935078/-, Rs.2515159/- Rs.4385324/- Rs.1548287/-, Rs.3404497/-,
Rs.35731692/-, Rs.2979856/-, Rs.2340318/-, Rs.1221090/-, Rs.7683401/-,
Rs.4768903/-, Rs.2936802/-, Rs.6078494/- and Rs.1201976/- against A.P.,
Chennai, Delhi, H.P., Haryana, Karnataka, Kerala, Kolkata, M.P., Maharashtra,
Mumbai, Punjab, T.N. and UP(West) license service areas respectively, which
will be adjusted against the future License Fee dues of the concerned license
service areas on receipt of the details mentioned in Para 7 below and
consequent re-assessment of License Fee dues thereafter. It may also be noted that amount of
Rs.1831634/- outstanding against Gujrat license service area is due after
calculating interest up to 31.05.2007.
4. Attention is invited to Auditor’s report
on Statement of Revenue & License Fee Annexure-I, Para 3(a) and 3(c) of
notes to the Statement of Revenue & License Fee for different quarters of
theFY 04-05 for A.P. licensed service area:-
Para 3(a) – “The operator wise
revenue share access charges and roaming revenues actually passed on to other
service providers have been prepared based on management estimates as
segregation of the same is not readily retrievable from the books of account of
the circle.”
Para 3(c) – “Call revenue has
been segregated into call revenue within the service area, national long distance
call revenue and international long distance call revenue based on call traffic
pattern information available with the management. Accordingly, the segregated revenue figures
based on such estimation in the statement may not be accurate.”
5. Observation of similar nature has been
made in the Auditor’ report on Statement of Revenue and License Fee for the FY
05-06 in respect of all the licensed service areas of M/s Bharti Airtel Ltd.
(A.P., Chennai, Delhi, Gujrat, H.P., Haryana, Karnataka, Kerala, Kolkata, M.P.,
Maharashtra, Mumbai, Punjab, Tamil Nadu and UP(West).
6. In view of Para 4 and 5 above, a fresh
auditor’s report is required to be submitted for each of the licensed Service
Areas.
7. In addition to the above you are directed
to furnish the following details and clarifications:
(i) Duly audited quarter-wise operator-wise
details of (a) PSTN related call charges (Access charges) actually paid to
other eligible/entitled telecom service providers within Indian and (b) Roaming
charges actually paid to other operators, during the financial year 2005-06.
(ii) Duly audited quarter wise details of
rebates, discount and waivers, other than those agreed to with customers as per
Tariff Plans filed with the TRAI.
(iii) Duly audited quarter-wise details of sales
tax and service tax billed/collected/paid are required to be submitted.
(iv) Profit on sale of assets on gross basis i.e.
without any set off.
8. In the absence of adequate disclosures as
above the present assessment of License Fee for the financial year 2005-06 is
to be taken as provisional.
9. In case the above details and
clarifications are not received within 30 days of the issue of this letter, the
deductions already admitted will be disallowed and License Fee and interest
will be re-assessed and supplementary demand shall be issued.
10. The Auditor’s report on statement of
revenue and License Fee clearly stating that the statement has been prepared in
accordance with norms/guidelines contained in the License Agreement is to be
submitted.
11. You are directed to make the payment of
principal plus interest calculated up to 31.05.2007 amounting to Rs.18,31,634/-
(Rupees Eighteen lakh thirty one thousand six hundred thirty four only) in
respect of Gujrat license service area forthwith.”
The respondent
also directed the petitioner furnish details of sales tax and service tax as
well as profit on sale of assets on gross revenue basis as also the interest
calculated upto 31.5.2007 amounting to almost Rs.18 lakhs.
Indisputably,
the Supreme Court of India on appeals having been preferred from the orders of
this Tribunal dated 30.8.2007 passed a limited order of stay i.e., “no
adjustment shall be made in the mean time”.
Whereas
the Department of Telecommunications contends that the said order amounts to
stay of the operation of the judgment of this Tribunal; according to the
petitioners, the same would amount to an order of status quo in terms whereof,
the respondent was divested of its jurisdiction to reopen the assessment of
AGR.
Indisputably,
relying on or on the basis of the said order of the Supreme Court of India, the
interim order of this Tribunal dated 23.10.2007 was prayed for being recalled in
terms of an application filed by the respondent which was dismissed by an order
dated 13.3.2009, stating—
“In the present case, the
interim order was passed by this Tribunal on 31.10.2007 regarding which prayer
for recall is being made by way of
present application. The ground on which
recall is sought is the order of the Supreme Court which only says no adjustments
shall be made. The Supreme Court has not
granted the prayer of present applicant i.e., applicant in S.L.P. for stay of
order dated 7.3.2008, wherein this Tribunal has already considered effect of
Supreme Court's order.
Thus, it will be seen that the interim orders passed by
the Supreme Court in this matter is similar and is to the effect that no
adjustments shall be made. By filing the present application for recall of the
order dated 31.10.2007, the applicant is
re-agitating the same issue which has been fully considered and rejected by the
Tribunal in its order dated 7.3.2008 referred to above. We see no reason to take a different
view. The application is dismissed.”
The
impugned demand was made thereafter. It
was made on ‘actually’ paid basis. We
have noticed hereinbefore that the notice of demand pertains to 17 Circles, out
of which 15 Circles are in respect of the first petitioner; whereas the other
two Circles being Rajasthan and North East, pertain to the licenses granted to petitioner
No. 2. The demand raised as against the petitioner No. 2 was Rs. 599045 + Rs.
(-) 116509 only.
Aggrieved
by and dissatisfied with the said order dated 13.3.2009, the respondent filed a
Special Leave Petition (SLP) wherein an order of stay was passed on 7.12.2009. An application for modification of stay was
filed by the petitioner before the Supreme Court of India and by an order dated
7.12.2009, the order of stay was modified to the extent that the petitioner would
pay on the existing basis.
The respondent,
as the petitioners have demonstrated, had been taking inconsistent and
contradictory stands in regard to the method of accounting.
It had
applied two different yardsticks in the same financial year, i.e., ‘accrual’
and ‘actually paid’ basis for calculating the amount of license fee, as would
be evident from the following examples :
CHART FOR KARNATAKA CIRCLE (PSTN) FOR THE YEAR
2005-06
|
Quarter |
As per DoT Demand
Notice (in Rs.) |
Calculations on
accrual basis by the petitioner (in Rs.) |
Calculations on actual
basis by the petitioner (in Rs.) |
Remarks (Method
adopted by DoT) (in Rs.) |
|
Q-1 |
56,05,00,703 |
56,05,00,703 |
55,14,77,512
|
Actually
paid basis |
|
Q-2 |
56,91,25,540 |
56,91,25,540
|
57,58,10,766
|
Accrued
basis |
|
Q-3 |
63,41,93,036
|
63,41,93,036
|
64,74,11,370
|
Actually
paid basis |
|
Q-4 |
70,46,65,058
|
70,46,65,058
|
66,94,79,023 |
Actually
paid basis |
CHART FOR KARNATAKA CIRCLE (ROAMING) FOR THE
YEAR 2005-06
|
Quarter |
As per DoT Demand
Notice (in Rs.) |
Calculations on
accrual basis by the petitioner (in Rs.) |
Calculations on actual
basis by the petitioner (in Rs.) |
Remarks (Method
adopted by DoT) (in Rs.) |
|
Q-1 |
13,89,82,354
|
13,89,82,354
|
14,70,43,520
|
Actual
basis |
|
Q-2 |
13,65,41,938
|
13,65,41,938
|
15,07,12,608
|
Accrual
basis |
|
Q-3 |
16,60,57,520
|
16,60,57,520
|
17,28,98,863
|
Actual
basis |
|
Q-4 |
16,89,48,930
|
16,89,48,930
|
17,28,98,863 |
Actual
basis |
CHART FOR ANDHRA PRADESH CIRCLE (PSTN) FOR THE
YEAR 2005-06
|
Quarter |
As per DoT Demand
Notice (in Rs.) |
Calculations on
accrual basis by the petitioner (in Rs.) |
Calculations on actual
basis by the petitioner (in Rs.) |
Remarks (Method
adopted by DoT) (in Rs.) |
|
Q-1 |
26,96,63,084
|
26,96,63,084
|
24,63,89,452
|
Accrual
basis |
|
Q-2 |
25,45,50,872
|
25,45,50,872
|
26,16,41,800
|
Actual
basis |
|
Q-3 |
32,10,46,591
|
32,10,46,591
|
29,93,67,236
|
Accrual
basis |
|
Q-4 |
38,09,19,929
|
38,09,19,929
|
34,76,20,705 |
Accrual
basis |
CHART FOR ANDHRA PRADESH CIRCLE (ROAMING) FOR
THE YEAR 2005-06
|
Quarter |
As per DoT Demand
Notice (in Rs.) |
Calculations on
accrual basis by the petitioner (in Rs.) |
Calculations on actual
basis by the petitioner (in Rs.) |
Remarks (Method
adopted by DoT) (in Rs.) |
|
Q-1 |
4,75,39,912
|
4,75,39,912
|
4,21,04,637
|
Accrual
basis |
|
Q-2 |
3,99,77,136
|
3,99,77,136
|
4,47,08,790
|
Actual
basis |
|
Q-3 |
4,98,73,343
|
4,98,73,343 |
5,03,35,687
|
Accrual
basis |
|
Q-4 |
5,31,25,687
|
5,31,25,687
|
5,26,45,385
|
Accrual
basis |
Mr.
Ramji Srinivasan, the learned senior counsel appearing on behalf of the
petitioners, would urge:-
(i)
The respondent should not have raised a demand
on ‘actual basis’ in stead and place of ‘accrual’ basis upon making
re-assessment of license fee or otherwise.
(ii)
Various components of calculation of license fee
which had been excluded in terms of the judgment of this Tribunal dated
30.8.2007 could not have been the subject matter of assessment of the license
fee.
(iii)
Adoption of two different yardsticks for revenue
and expenditure is arbitrary in nature.
(iv)
The respondent is bound by the judgment of this
Tribunal.
Mr.Vineet
Malhotra, the learned counsel appearing on behalf of the respondent, on the
other hand, submitted:-
(i)
The order of stay passed by the Supreme Court of
India must be held to mean that the judgment of this Tribunal was not in force.
(ii)
Re-assessment of AGR had been made in terms of
the terms and conditions of the license.
(iii)
The judgment of this Tribunal having been
rendered on 30.8.2007, the petitioners are not entitled to any relief as the
re-assessment of AGR relates to the F.Y. 2005-06.
This
Tribunal, in its judgment dated 30.8.2007 passed in Petition No. 7 of 2003
including Petition No. 82 of 2005, inter alia, held as under:-
15. Inclusion of items of revenue on accrual
basis but exclusion of items of cost on actual payment basis.
The petitioners are at pains to
point out inconsistency and unfairness in following the practice of taking into
consideration revenue on accrual basis while costs are allowed to be deducted
on actual payment basis. To demonstrate this it was contended that service tax
is included in the revenue on accrual basis but deduction is allowed only on
actual payment. This results in difference between revenue booked and
deductions made. As a result of this most service providers end up paying
licence fee even on the uncollected portion of the service tax. DoT has supported
the existing practice. The Authority concluded that service tax is not a revenue
for the service provider but service provider is only a collecting agency on
behalf of the Government. The inclusion and exclusion on this item should be on
accrual basis. The Authority recommended that service tax should be shown on accrual
basis both for inclusion and exclusion for the purpose of AGR. It also recommended
that interconnection usage are also to be shown on accrual basis both for
inclusion and exclusion from the gross revenue for purpose of AGR. We find no
reason to differ with the view of the Authority on this point. The recommendation
of the Authority is, therefore, affirmed.”
Indisputably,
some of the items for the purpose of re-assessment of annual license fee
considered by the respondent include the items which, according to this
Tribunal could not have been taken in to consideration being outside the scope
of telecommunication activities.
From
the following chart, it would furthermore appear that the impugned demand is
contrary to the order of this Tribunal dated 30.8.2007:-
“Comparative Chart
Showing Impugned Demand is Contrary to the TDSAT Judgment dated 30.8.2007
|
Component
of Demand |
Covered
by TDSAT Judgement dated 30.8.2007 |
|
Revenue earned from interconnect usage charge |
It also recommended that interconnection usage
are also to be shown on accrual basis both for inclusion and exclusion from
the gross revenue for purpose of AGR.
We find no reason to differ with the view of the Authority on this
point. The recommendation of the
Authority is, therefore, affirmed. |
|
Revenue from Foreign exchange fluctuations,
disincentives and waivers. |
According to the TRAI impact of foreign
exchange fluctuations, whether upward or downward, on AGR must be
ignored. Foreign exchange fluctuation
is a contingency which has impact on every business which may have something
to do with foreign exchange.
Fluctuations in foreign exchange rates have nothing to do with
licensed activity of telecom service providers. Union
of India, however, submits that incomes accruing on account of foreign
exchange fluctuations and which are accounted for in the income statements of
the licensee form part of the revenues and hence are subject to levy of
license fee by treating it part of AGR.
We are unable to accept this. Foreign exchange fluctuations do not
arise from licensed activity and, therefore, need not be included in
AGR. Secondly, the Union of India does
not say anything whether they will permit deduction from AGR if loss occurs
on account of such fluctuations. We affirm the recommendation of
TRAI on this point. |
|
Bad debts, waivers, discounts |
Bad
debts, waivers or discounts are actual monies lost by the service
provider. Therefore, such losses have
to be excluded from AGR. Allowing amounts on account
of such losses to be included in AGR would mean that while the party incurs
loss it has to pay licence fee on the loss also. The recommendation of TRAI in this behalf
is, therefore, set aside and we recommend that items under this head have to be excluded from AGR. |
|
Inclusion of items of revenue on accrual basis
but exclusion of items of cost on actual payment basis |
The petitioners are at pains to point out
inconsistency and unfairness in following the practice of taking into
consideration revenue on accrual basis while costs are allowed to be deducted
on actual payment basis. To
demonstrate this it was contended that service tax is included in the revenue
on accrual basis but deduction is allowed only on actual payment. This results in difference between revenue
booked and deductions made. As a
result of this most service providers end up paying licence fee even on the
uncollected portion of the service tax……It
also recommended that interconnection usage are also to be shown on accrual
basis both for inclusion and exclusion from the gross revenue for purpose of
AGR. We find no reason to differ with
the view of the Authority on this point.
The recommendation of the Authority is, therefore, affirmed. |
It would
furthermore be of some significance to notice that by reason of one
communication, demand had been raised in respect of so many circles on both
petitioner Nos. 1 and 2 for a sum of Rs. 17,66,64,731/-.
It is
not in dispute that the petitioners had supplied details of the receipts and
expenditures as demanded by the respondent on ‘actual’ basis also.
The respondent
in its reply, however, contended that the principles laid down by this Tribunal
in its judgment have not assumed finality as appeals have been preferred before
the Supreme Court of India.
The
Supreme Court of India, as noticed hereinbefore, merely directed that no
adjustment should be made in the mean time.
The said order, in our considered opinion, does not amount to stay of
the operation of the judgment of this Tribunal.
If the Supreme Court of India intended to stay the operation of the judgment,
it could have said so explicitly. It consciously
passed a limited order of stay. It is
not within the province of the respondent to expand the scope thereof. If the respondent intended to obtain any
clarification of the said order, it should have approached the Supreme Court of
India therefor.
Furthermore,
the Supreme Court of India itself in its order dated 11.1.2010, directed that
payment should be made on existing basis.
The operation of order of this Tribunal having, thus, not been stayed,
the same would mean that the directions issued by it were required to be
followed in making computation of the license fee.
We may
notice that this Tribunal even in its order dated 31.10.2007 directed as
under:-
“The petitioner has raised various pleas in this petition. It is submitted that as of today the judgement of this Tribunal
dated 30.8.07 holds the field and
without prejudice to the various other contentions of the petitioner in
this petition at least from today onwards the Respondent No.1 should bill the petitioner on the basis of the law laid
down in the said judgement. The learned
counsel appearing for respondent is
unable to controvert the fact that the
judgement of this Tribunal holds the field.
Accordingly, I direct that respondent
will bill the petitioner at least from today onwards on the basis of law
laid down in the said judgement of this Tribunal dated 30.8.07. This will be
without prejudice to the rights and contentions of the parties.”
Yet
again, in Petition No. 284 of 2007, by an order dated 23.10.2007, similar
observations were made.
The
respondent was even bound by the observations made in the said interim
orders. An order passed by this Tribunal
against the respondent was meant to be followed. It could not have been circumvented, being
binding on it.
We
have, furthermore, noticed that the method of accounting adopted by the
respondent was not in consonance with any known method of accounting. By reason of such amalgam of accounting
method, the petitioners have been put to financial loss.
We may
furthermore notice that for the period 1.4.2005 to 31.3.2006, the PSTN related
call charges passed on to the other operators were Rs.1,226,180,477/-.
We have
dealt with this aspect of the matter in Vodafone v. BSNL (P. No. 325 of 2007). In that view of the matter it is not necessary
to reiterate the reasonings stated therein.
We,
therefore, are of the opinion that the petition should be allowed and the
respondent should be directed to adjust accounts on accrual basis so far as the
petitioner No. 1 is concerned. The
amount which is lying in the hands of the respondent should be refunded with
interest @ 12% per annum.
Mr.
Malhotra, however, appears to be correct that so far as the petitioner No. 2 is
concerned, that it having obtained an order of stay only on 30.8.2007, would
not be entitled to any relief, the demand having been made for the assessment
year 2005-06. However, petitioner No. 1
having approached this Tribunal in 2003, the petition must be allowed so far as
it is concerned.
In the peculiar
facts and circumstances of the case, there shall be no order as to costs.
………....... J
(S.B. Sinha)
Chairperson
…………….....
(G. D. Gaiha)
Member